World stocks fell further and oil headed for a double-digit weekly slide on Friday as jitters over a rising global COVID-19 infection rate and next week’s US presidential election more than offset strong euro zone quarterly growth data.
A strong central bank-fuelled bounce back from the initial pandemic slide earlier in the year has faltered this week, with concerns about an even worse second wave of infections, particularly in Europe, taking the froth off markets.
“The US election, the extent of further lockdown measures, Brexit negotiations and vaccine news all present both upside and downside risks over the coming weeks and it is understandable that investors may want to proceed with caution,” said Mark Dowding, chief investment officer at BlueBay Asset Management.
World stocks were down 0.3 per cent at 0925 GMT (2:55 pm in India), tracking weakness in Asia, while US stock futures were down 1 per cent to 1.3 per cent. Gold rose, with spot prices climbing 0.3 per cent to $1,873 an ounce.
In Europe, the blue-chip EuroSTOXX 50 was down 0.7 per cent to take its weekly loss to 6.9 per cent and leaving it at levels last seen in late May. MSCI’s broadest index of Asia-Pacific shares outside of Japan closed down 1.2 per cent for a 2.2 per cent weekly loss, breaking four straight weeks of gains.
“New lockdowns across Europe are being harshly repriced by markets,” Barclays equity strategist Emmanuel Cau said in a note to clients.
“With complacency going fast, this dip could end up offering another good entry point, but a lot depends on the election outcome and timing of the results.”
European government bond yields rose in response to fresh COVID restrictions across the continent, with Italian, Spanish and German 10-year debt yields all up between 1 and 2 basis points.
While Brent crude enjoyed something of a bounce approaching midday in London – up 0.5 per cent and broadly in line with its US peer – it still remains down sharply on the week, facing losses of nearly 10 per cent.